-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qf7SDwPELtGtpqJA+lAPTx72jdPJchqKmL7ZTJwYBEo+BOC82GYPvxm0PN/nvUCO C09XdJjMUiIeZNopO2vLJw== /in/edgar/work/20000628/0000889812-00-002969/0000889812-00-002969.txt : 20000920 0000889812-00-002969.hdr.sgml : 20000920 ACCESSION NUMBER: 0000889812-00-002969 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CLAIMS EVALUATION INC CENTRAL INDEX KEY: 0000774517 STANDARD INDUSTRIAL CLASSIFICATION: [6411 ] IRS NUMBER: 112601199 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-14807 FILM NUMBER: 663641 BUSINESS ADDRESS: STREET 1: 375 N BROADWAY STREET 2: ONE JERICHO PLAZA CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5169388000 MAIL ADDRESS: STREET 1: ONE JERICHO PLAZA CITY: JERICHO STATE: NY ZIP: 11753 10KSB 1 0001.txt ANNUAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2000 -------------- [ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------- --------- Commission file number 0-14807 ------- AMERICAN CLAIMS EVALUATION, INC. (Name of small business issuer in its charter) New York 11-2601199 - ----------------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Jericho Plaza, Jericho, NY 11753 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number: (516) 938-8000 -------------- Securities registered under Section 12(b) of the Exchange Act: None. Securities registered under Section 12(g) of the Exchange Act: Common Shares, $.01 par value ----------------------------- (Title of class) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The issuer's revenues for the fiscal year ending March 31, 2000 were $1,109,286. [Cover page 1 of 2 pages] The aggregate market value of the issuer's voting stock held by non-affiliates, based on the average high and low prices of such stock on June 16, 2000, as reported on NASDAQ, was $3,379,706. For purposes of this calculation, shares of common stock held by directors, officers and stockholders whose ownership exceeds five percent of the common stock outstanding at June 16, 2000 were excluded. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of management or policies of the issuer, or that such person is controlled by or under common control of the issuer. As of June 16, 2000, there were 4,273,500 shares of the issuer's common stock, $.01 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE None. Transitional Small Business Disclosure Format (check one): Yes No X ---- ---- [Cover page 2 of 2 pages] PART I Item 1. Description of Business. American Claims Evaluation, Inc. (the "Company") was incorporated in the State of New York and commenced operations in April 1982. The Company provides a full range of vocational rehabilitation and disability management services designed to maximize injured workers' abilities in order to reintegrate them into their respective communities through its wholly-owned subsidiary, RPM Rehabilitation & Associates, Inc. The functional capabilities of the injured workers referred to the Company vary. Comprehensive, in-house vocational evaluations are utilized to assess aptitudes, interests, values and abilities. Issues of medical restrictions, functional overlays, illiteracy and occupational diseases are assessed and factored into the development of a rehabilitation strategy. Specifically, in working with injured workers, the purpose and intent are to bring the injured worker back to work with the employer of injury as soon as medically feasible. The role of a vocational rehabilitation consultant is to convene the claimant, the employer of injury, and associated medical professionals to facilitate an expedited return to work, utilizing the principles of job accommodation, job modification and transitional work. In addition, the consultant can provide medical monitoring of the worker's progress through pain clinics and work hardening programs. Coordination of these services assist the worker in building strength and motivation to return to their employer and/or occupation at the time of injury. The Company's philosophy is that timely coordination of professional services, coupled with education and liaison with the employer community provides positive results for all parties concerned. Some early intervention activities include contacting employers at the time of injury to develop return to work strategies such as work restructuring and job modification, on site analysis, local labor market analysis and obtaining work histories. Feedback from clients' claims managers regarding the Company's responsive interventions indicates a trusting, team approach which allows for clear and accurate assessments that expedites the adjudication process, resulting in timely and successful case closure. RPM is currently approved as a "preferred provider" of vocational rehabilitation services to the Washington State Department of Labor & Industries ("L&I") under two separate contracts, which expire on January 1, 2001, as extended. For the year ended March 31, 2000, the L&I contracts accounted for 66% of the Company's total revenues. Although RPM has successfully renewed its contracts with L&I since its inception in 1986, there can be no assurances that these contracts will continue to be renewed in future periods. Marketing and Advertising The President of the Company and the President of RPM are responsible for the Company's sales and marketing program. In addition to direct contact with leading health care payers, the Company advertises its services in trade magazines and exhibits at conventions and trade association meetings. Competition The vocational rehabilitation field is highly competitive. The Company competes with a number of businesses that provide the same services. Many of these competitors have a longer operating history, greater financial resources, and provide other services to the insurance companies that the Company does not provide. -3- Principal competitors in vocational rehabilitation include national firms, such as Concentra Managed Care, Inc. and Crawford & Company, as well as many regional firms. Quality of service, high caliber consultants, proper pricing and range of services offered are the principal factors that will enable the Company to compete effectively. Employees As of March 31, 2000, the Company had twenty full-time employees and two part-time employees. Of these full-time employees, three were in management, eleven were vocational rehabilitation consultants and six were in administration. Item 2. Description of Property. The Company leases approximately 2,700 square feet of space at its executive office in Jericho, New York under a lease, as extended, which expires in November 2003. RPM leases approximately 3,300 square feet of office space in Spokane, Washington under a lease, as extended, which expires in June 2005. RPM also maintains an office in Moses Lake, Washington which is leased on a month-to-month basis. The Company believes that its existing facilities will be adequate to meet its present needs. However, should the Company require additional space it is assumed that such space will be available. Item 3. Legal Proceedings. The Company is not engaged in any material litigation. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the fourth quarter of the year ended March 31, 2000. -4- PART II Item 5. Market for Common Equity and Related Stockholder Matters. The Company's common shares, par value $.01 (the "Shares"), trade on the Nasdaq SmallCap Market under the symbol "AMCE.". The following table sets forth the range of high and low sales prices for the Company's Shares for each quarter during the period April 1, 1998 through March 31, 2000: High Low ---- --- Fiscal 1999: 4/01/98 - 6/30/98 2 5/8 1 3/8 7/01/98 - 9/30/98 2 11/16 1 7/8 10/01/98 - 12/31/98 2 1/8 1 5/8 1/01/99 - 3/31/99 2 1/4 1 11/16 Fiscal 2000: 4/01/99 - 6/30/99 2 9/16 1 11/16 7/01/99 - 9/30/99 4 1/2 2 5/32 10/01/99 - 12/31/99 2 13/16 1 1/2 1/01/00 - 3/31/00 4 5/16 1 29/32 The number of holders of the Company's Shares was approximately 768 on March 31, 2000, computed by the number of record holders, inclusive of holders for whom Shares are being held in the name of brokerage houses and clearing agencies. The Company has never paid a cash dividend and does not presently anticipate doing so in the foreseeable future, but expects to retain earnings, if any, for use in its business. -5- Item 6. Management's Discussion and Analysis or Plan of Operation. Results of Operations For the fiscal year ended March 31, 2000 ("Fiscal 2000"), revenue from vocational rehabilitation services totaled $1,109,286, a decrease of 5.1% from the $1,169,436 reported for the fiscal year ended March 31, 1999 ("Fiscal 1999"). Revenue for Fiscal 1999 had experienced a 9.0% decrease from the $1,285,798 generated in the fiscal year ended March 31, 1998. During Fiscal 2000, approximately 66% of total revenues were generated providing vocational rehabilitation services to the Washington State Department of Labor & Industries ("L&I"). If the Company's contracts with L&I are not renewed in January 2001, there would be a material adverse effect on the consolidated results of operations. The cost of vocational rehabilitation services was 46.0% of revenues for Fiscal 2000 as compared to 43.7% of revenues for Fiscal 1999. The Company experienced an increase in the cost of vocational rehabilitation services beginning in Fiscal 1999 due to larger percentages of cases being completed by higher priced rehabilitation consultants. Selling, general and administrative expenses were $1,105,147 and $1,133,580 in Fiscal 2000 and Fiscal 1999, respectively. Interest income increased slightly to $461,257 during Fiscal 2000, as compared to interest income of $452,181 for Fiscal 1999. Miscellaneous income, including commission payments received based upon the net revenues of its sold hospital bill audit division, amounted to $47,684 in Fiscal 2000, as compared with ancillary revenues of $115,967 for Fiscal 1999. Liquidity and Capital Resources The Company's primary source of cash is internally generated funds. At March 31, 2000, the Company had working capital of $8,094,047 as compared to working capital of $8,120,621 at March 31, 1999. For Fiscal 2000, net cash used by operating activities was $26,129. Cash flows used in investing activities totaled $730,897, consisting primarily of $728,790 used for purchases of marketable securities. The Company continues its review of strategic alternatives for maximizing shareholder value. Potential acquisitions will be evaluated based on their merits within its current line of business, as well as other fields. Management believes that the Company has sufficient cash resources and working capital to meet its capital resource requirements for the foreseeable future. Forward Looking Statements Except for the historical information contained herein, the matters discussed in this report on Form 10-KSB and the Company's other periodic reports and other documents incorporated by reference or incorporated herein as exhibits, may contain forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic and market -6- conditions, the potential loss or termination of existing clients and contracts and the ability of the Company to successfully identify and thereafter consummate one or more acquisitions. Item 7. Financial Statements. The financial statements required by this Item are set forth at the pages indicated in Item 13 following page 12 of this report. Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. None. -7- PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act. The executive officers and directors of the Company are as follows: Name Age Position ---- --- -------- Gary Gelman 53 Chairman of the Board, President and Chief Executive Officer Gary J. Knauer 40 Chief Financial Officer, Treasurer and Secretary Edward M. Elkin, M.D. 61 Director Peter Gutmann 71 Director Gary Gelman, the founder of the Company, has been Chairman of the Board since July 1, 1985, and President, Chief Executive Officer and a director since inception. Mr. Gelman served as Treasurer from inception to October 1991. Since 1973, Mr. Gelman has also been Chief Executive Officer and a principal of American Para Professional Systems, Inc., which provides nurses who perform physical examinations of applicants for life and/or health insurance for insurance companies. He received a B.A. from Queens College. Since 1996, Mr. Gelman has been Chairman of the Board of Directors of Misonix, Inc., a publicly traded company engaged in the design, development and manufacturing of ultrasonic devices including medical instruments. Gary J. Knauer joined the Company as its Controller in July 1991 and has served as Chief Financial Officer and Treasurer since October 1991 and as Secretary since March 1993. Before joining the Company, Mr. Knauer was employed from October 1984 to June 1991 by the accounting firm of KPMG LLP. He is a Certified Public Accountant and holds a B.S. from the State University of New York at Binghamton. Since February 1994, Mr. Knauer also serves as Chief Financial Officer of American Para Professional Systems, Inc. Edward M. Elkin, M.D. has been a director of the Company since July 1, 1985. For more than the past five years, Dr. Elkin has been performing services relating to utilization review and quality assurance in hospitals for the New York State Department of Health. He is certified by the American Board of Pediatrics and the American Board of Quality Assurance and Utilization Review Physicians. He received his B.A. from Harvard College and his M.D. from New York University School of Medicine. Peter Gutmann has been a director of the Company since July 1, 1985. For more than the past twenty years, he has been a Professor of Economics and Finance at Baruch College, City University of New York and was Chairman of the Economics and Finance Department from 1971 to 1977. He received a B.A. from Williams College, a B.S. from Massachusetts Institute of Technology, an M.A. from Columbia University and a PhD. from Harvard University. -8- Item 10. Executive Compensation. The following table sets forth all plan and non-plan compensation awarded to, earned or paid to the Company's Chief Executive Officer for each of the Company's last two fiscal years. No other executive officer had total annual salary and bonus which exceeded $100,000 during the Company's fiscal year ended March 31, 2000. SUMMARY COMPENSATION TABLE
Long-Term Compensation Annual Compensation Awards ------------------------------------------- ----------------- Name and Other Annual All Other Principal Fiscal Salary Bonus Compensation Options Compensation Position Year ($) ($) ($)(1) (#) ($)(2) - ----------- ------ ------------- --------- --------------- ----------------- ------------------- Gary Gelman 2000 $244,311 - - - $1,636 Chairman, 1999 244,311 - - - - President and CEO
(1) The aggregate amount of all perquisites and other personal benefits paid to the Chief Executive Officer is not greater than either $50,000 or 10% of the total annual salary and bonus reported. (2) Consists of matching contributions made by the Company under the 401(k) plan for the fiscal year ended March 31, 2000. Compensation Plans The following describes plans adopted by the Company pursuant to which cash or non-cash compensation was paid or distributed during the years ended March 31, 2000 and 1999, or pursuant to which such compensation may be distributed in the future, to the Chief Executive Officer. 401(k) Profit Sharing Plan The Company sponsors a profit sharing plan covering all employees having reached the age of 21 with one or more years of service. The plan is qualified under Section 401(k) of the Internal Revenue Code of 1986 (the "Code"). Such plan requires the Company to match participants' contributions to the extent of 10% of such eligible contributions. Under the terms of the plan, there is a vesting requirement with respect to Company contributions, but employees are fully vested in their own salary deferral contributions. Stock Option Plans In July 1985, the Company's Board of Directors adopted the 1985 Stock Option Plan (the "1985 Plan"). The 1985 Plan has expired, except as to options outstanding (consisting of 27,500 options outstanding at March 31, 2000), and no additional options may be granted. The 1985 Plan provided for the issuance of up to 400,000 Shares to full-time employees and directors of the Company. Incentive stock options were granted at the fair market value of the Company's Shares at the date of grant. The option terms were determined by -9- the Board of Directors, but no options were granted with a term of more than ten years. The options are not transferable and not exercisable while any previously granted incentive stock options under the 1985 Plan are outstanding, and are exercisable only while the optionee is associated with the Company and for three months thereafter, with certain exceptions. In March 1991, the Board of Directors adopted the Company's 1991 Stock Option Plan (the "1991 Plan") and in October 1991, the shareholders of the Company ratified, approved and adopted the 1991 Plan. Under the 1991 Plan, a total of 400,000 Shares are reserved for issuance to employees, including directors and officers who may not be salaried employees. Both incentive and nonstatutory stock options may be granted under the 1991 Plan, at a price to be determined by the option committee, provided, however, that incentive stock options must be granted at an exercise price not less than the fair market value of the Shares on the date of the grant. Such exercise price may be payable in cash or by a combination of cash or Shares with the approval of the committee which administers the 1991 Plan. The term of any option may not exceed ten years from the date of grant. Condi tions of the exercise of options are fixed by a committee appointed by the Board of Directors, consisting of not less than two nor more than five persons. Optionees under the 1991 Plan with incentive options may exercise up to 25 percent of such option granted for each year of service to the Company after the date of grant of the option, but the committee may accelerate the schedule of the time or times when an option may be exercised, provided that the fair market value of the securities subject to an incentive option may not exceed $100,000 at the first time such options become exercisable. The 1991 Plan also provides for stock appreciation rights, pursuant to which the optionee may surrender to the Company all or any part of an unexercised option and receive from the Company in exchange therefor Shares having an aggregate market value equal to the dollar amount obtained by multiplying the number of Shares subject to the surrendered options by the amount by which the market value per share at the time of such surrender exceeds the exercise price per share of the related option. The Company's obligation arising from an exercise of stock appreciation rights may also be settled by the payment of cash, or a combination of cash and Shares. On May 7, 1997, the Board of Directors adopted the 1997 Incentive Stock Option Plan (the "1997 Plan") covering 750,000 Shares reserved for issuance. The shareholders of the Company ratified and approved the 1997 Plan in September 1997. Under the 1997 Plan, either incentive stock options or nonstatutory options may be granted as an incentive to key employees (including directors and officers who are key employees), non-employee directors, independent contractors and consultants of the Company and to offer an additional inducement in obtaining the services of such individuals. The exercise price of the Shares under each option shall be determined by a fixed committee appointed by the Board of Directors; provided, however, that the exercise price shall not be less than the fair market value of the Shares on the date of the grant. The term of each option pursuant to the 1997 Plan shall be such term as established by the committee appointed by the Board of Directors, in its sole discretion, provided that it shall be for a period not exceeding ten years from the date of the grant. On July 1, 1999, the Board of Directors granted options to purchase 25,000 Shares under the 1997 Plan at an exercise price of $2.50 to an executive officer. -10- Both the 1997 and 1991 Plans provide that the number of Shares subject thereto and the outstanding options and their exercise prices are to be appropriately adjusted for mergers, consolidations, recapitalizations, stock dividends, stock splits or combinations of shares. The current option committee appointed by the Board of Directors to administer the Company's stock option plans consists of Messrs. Gelman, Gutmann and Elkin. The Board of Directors may at any time terminate or from time to time amend or alter any of the existing stock option plans. Aggregated Option/SAR Exercises in 2000 and FY-End Option/SAR Values ---------------------------- The following table summarizes the number and dollar value of unexercised stock options at March 31, 2000 for the Chief Executive Officer.
Value of Number of Unexercised Unexercised In-the-Money Options at Options at Value FY-End (#) FY-End ($)(1) Shares Acquired Realized Exercisable/ Exercisable/ Name on Exercise(#) ($) Unexercisable Unexercisable - ----------------------------------- --------------- ------------ ------------- ------------- Gary Gelman, - - 400,000/- $425,000/- Chairman of the Board, President and CEO
(1) The closing price of the Company's Shares on March 31, 2000 as reported by the NASDAQ National Market System was $2.625 per Share. Employment Agreements Mr. Gelman's employment agreement with the Company provides for him to be employed as Chairman of the Board of Directors and Chief Executive Officer at an annual salary of $238,800. In addition, Mr. Gelman is entitled to participate in all employee benefit programs and other policies and programs of the Company. Mr. Gelman is not required to devote any specific number of hours to the business of the Company. He is subject to a non-competition and non-disclosure covenant for a period of three years following termination of employment with the Company. Director Compensation The Company's policy is to pay its non-employee directors a uniform fee of $400 for each Board of Directors meeting and/or Audit Committee meeting attended in person. Option Grants in Last Fiscal Year No options were granted to the Chief Executive Officer during the fiscal year ended March 31, 2000. -11- Item 11. Security Ownership of Certain Beneficial Owners and Management. The following table and notes thereto sets forth information regarding the beneficial ownership of the Company's Shares as of June 16, 2000 by (i) each person known by the Company to be the beneficial owner of more than 5% of such voting security, (ii) each director of the Company and (iii) all executive officers and directors of the Company as a group. The percentages have been calculated by taking into account all Shares owned on the record date as well as all such Shares with respect to which such person has the right to acquire beneficial ownership at such date or within 60 days thereafter. Unless otherwise indicated, all persons listed below have sole voting and sole investment power over the Shares owned.
Amount and Nature Name and Address of Beneficial Percent of Voting of Beneficial Owner Ownership (1)(4) Securities (1) - ------------------- --------------------- --------------------- Gary Gelman(2) 2,696,400 57.7% Peter Gutmann(2) 80,000(3) 1.9% Edward M. Elkin, M.D.(2) 60,200 1.4% Gary J. Knauer(2) 74,000 1.7% D.H. Blair Investment Corp. 423,824(5) 9.9% All executive officers and directors as a group (four persons) 2,910,600 60.4%
- ---------------- (1) Based on a total of 4,273,500 Shares issued and outstanding and 548,000 Shares issuable upon the exercise of presently exercisable stock options by persons described in the preceding table. (2) Address is c/o the Company, One Jericho Plaza, Jericho, N.Y. 11753. (3) Includes 4,000 Shares owned by the wife of Mr. Gutmann, as to which beneficial ownership is disclaimed by the respective reporting person. (4) Includes the presently exercisable portions of outstanding stock options (aggregating 548,000 Shares) which, in the case of Messrs. Gelman, Gutmann, Elkin, and Knauer are 400,000, 34,000, 40,000, and 74,000 Shares, respectively. (5) These Shares are owned of record by D.H. Blair Investment Banking Corp., whose address is 44 Wall Street, New York, New York ("Blair Investment") (385,824 Shares), by Mr. J. Morton Davis' wife (16,200 Shares) and by Rivkalex Corporation, a private corporation controlled by Mr. Davis' wife (21,800 Shares). Mr. Davis has reported Blair Investment's Shares as being beneficially owned by himself but has disclaimed ownership of the 21,800 Shares and 16,200 Shares described in this table owned by Rivkalex Corporation and by Mr. Davis' wife, respectively. Item 12. Certain Relationships and Related Transactions. None. -12- PART IV Item 13. Exhibits and Reports on Form 8-K. Documents filed with this report 1. Financial Statements: -------------------- Independent Auditors' Report Consolidated Balance Sheets as of March 31, 2000 and 1999 Consolidated Statements of Operations for the years ended March 31, 2000 and 1999 Consolidated Statements of Stockholders' Equity for the years ended March 31, 2000 and 1999 Consolidated Statements of Cash Flows for the years ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements Financial Statement Schedules Financial statement schedules have been omitted because the required information is inapplicable or because the information is presented in the financial statements or related notes. 2. 10.1 Lease Renewal Agreement dated May 16, 2000 between Gateway Associates as Owner and RPM Rehabilitation & Associates, Inc. as tenant with respect to the premises at 901 E. 2nd Avenue, Spokane, Washington. 23 Consent of Independent Auditors. 27 Financial Data Schedule. Exhibits The following were filed as exhibits to the Company's Annual Report on Form 10-K for its year ended March 31, 1998 and are incorporated by reference herein: 1. Tenth Amendment dated May 1997 to Employment Agreement between the Company and Gary Gelman. 2. Lease Extension and Modification Agreement dated February 24, 1998 between Chasco Company as landlord and the Company as tenant with respect to the premises at One Jericho Plaza, Jericho, New York. The following was filed as an Exhibit to the Company's Registration Statement on Form S-8 (File No. 333-39071) and is incorporated by reference herein: 1. 1997 Stock Incentive Plan. The following was filed as an exhibit to the Company's Annual Report on Form 10-K for its year ended March 31, 1996 and is incorporated by reference herein: -13- 1. Ninth Amendment dated February 13, 1996 to Employment Agreement between the Company and Gary Gelman. The following were filed as exhibits to the Company's Annual Report on Form 10-K for its year ended March 31, 1995 and are incorporated by reference herein: 1. Eighth Amendment dated March 2, 1995 to Employment Agreement between the Company and Gary Gelman. 2. Lease dated March 10, 1995 between Gateway Associates as landlord and RPM Rehabilitation & Associates, Inc. as tenant with respect to premises at 901 East Second Avenue, Spokane, Washington. The following were filed as exhibits to the Company's Annual Report on Form 10-K for its year ended March 31, 1994 and are incorporated by reference herein: 1. Seventh Amendment dated March 9, 1994 to Employment Agreement between the Company and Gary Gelman. 2. Lease dated August 20, 1993 between Chasco Company as landlord and the Company as tenant with respect to premises at One Jericho Plaza, Jericho, New York. The following were filed as exhibits to the Company's Annual Report on Form 10-K for its year ended March 31, 1989 and are incorporated by reference herein: 1. Amendment dated March 1, 1989 to Employment Agreement between the Company and Gary Gelman. 2. Certificate of Amendment of Certificate of Incorporation of the Company filed October 19, 1987. The following were filed as an Exhibit to the Company's Registration Statement on Form S-18 (File No. 2-99625-NY) and are incorporated by reference herein: 3.1 Certificate of Incorporation of the Company as amended. 10.1 Employment Agreement dated February 1, 1986 between the Company and Gary Gelman. 10.3 1985 Stock Option Plan. The following were filed as an Exhibit to the Company's Registration Statement on Form S-3 (File No. 33-40200) and are incorporated by reference herein: 3.2 By-Laws of the Company. 10.1 Fourth Amendment to Employment Agreement dated as of February 27, 1991 between the Company and Gary Gelman. 10.5 1991 Stock Option Plan Exhibits to the Company's reports on Form 8-K dated September 14, 1993 and April 21, 1997 are incorporated by reference herein. Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 2000. -14- SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN CLAIMS EVALUATION, INC. By: /s/ Gary Gelman --------------------------------- Gary Gelman Chairman of the Board, President and Chief Executive Officer DATE: June 23, 2000 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURES TITLE DATE - ---------- ----- ---- /s/ Gary Gelman Chairman of the Board, June 23, 2000 - ------------------------------------ President and Chief Gary Gelman Executive Officer (Principal Executive Officer) /s/ Gary J. Knauer Chief Financial Officer, June 23, 2000 - ------------------------------------- Treasurer (Principal Financial Gary J. Knauer and Accounting Officer) and Secretary /s/ Edward M. Elkin Director June 23, 2000 - ------------------------------------ Edward M. Elkin, M.D. /s/ Peter Gutmann Director June 23, 2000 - ------------------------------------- Peter Gutmann
-15- AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Financial Statements (Form 10-KSB) March 31, 2000 and 1999 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY TABLE OF CONTENTS
PAGE Independent Auditors' Report F-1 Consolidated Financial Statements: Consolidated Balance Sheets as of March 31, 2000 and 1999 F-2 Consolidated Statements of Operations for the years ended March 31, 2000 and 1999 F-3 Consolidated Statements of Stockholders' Equity for the years ended March 31, 2000 and 1999 F-4 Consolidated Statements of Cash Flows for the years ended March 31, 2000 and 1999 F-5 Notes to Consolidated Financial Statements F-6
Financial statement schedules have been omitted as the required information is inapplicable or the information is presented in the related notes to the consolidated financial statements. INDEPENDENT AUDITORS' REPORT The Board of Directors American Claims Evaluation, Inc.: We have audited the accompanying consolidated balance sheets of American Claims Evaluation, Inc. and subsidiary as of March 31, 2000 and 1999 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended March 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Claims Evaluation, Inc. and subsidiary, as of March 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the two-year period ended March 31, 2000 in conformity with generally accepted accounting principles. KPMG LLP Melville, New York May 22, 2000 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Balance Sheets March 31, 2000 and 1999
Assets 2000 1999 ----------- ----------- Current assets: Cash and cash equivalents $ 7,452,395 8,209,421 Marketable securities 644,240 - Accounts receivable (net of allowance for doubtful accounts of $1,000 in 2000 and 1999) 88,429 88,991 Prepaid expenses 21,886 19,380 Deferred income taxes 15,677 1,527 ----------- ----------- Total current assets 8,222,627 8,319,319 Property and equipment, net 40,079 54,756 Excess cost over fair value of net assets acquired, net of accumulated amortization of $212,114 and $179,689 in 2000 and 1999, respectively 436,386 468,811 ----------- ----------- $ 8,699,092 8,842,886 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 18,503 50,122 Accrued expenses 78,691 97,801 Income taxes payable 31,386 50,775 ----------- ----------- Total current liabilities 128,580 198,698 ----------- ----------- Commitments Stockholders' equity: Common stock, $.01 par value -10,000,000 shares authorized; 4,450,000 shares issued; 4,273,500 shares outstanding 44,500 44,500 Additional paid-in capital 3,515,699 3,515,699 Accumulated other comprehensive loss (68,600) - Retained earnings 5,377,130 5,382,206 ----------- ----------- 8,868,729 8,942,405 Treasury shares, at cost, 176,500 shares (298,217) (298,217) ----------- ----------- Total stockholders' equity 8,570,512 8,644,188 ----------- ----------- $ 8,699,092 $ 8,842,886 =========== ===========
See accompanying notes to consolidated financial statements. AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Operations Years ended March 31, 2000 and 1999
2000 1999 ---------------- --------------- Revenues $ 1,109,286 1,169,436 Cost of services 510,706 511,080 ---------------- --------------- Gross margin 598,580 658,356 Selling, general and administrative expenses 1,105,147 1,133,580 ---------------- --------------- Operating loss (506,567) (475,224) Other income: Interest income 461,257 452,181 Gain on sale of marketable securities 550 - Miscellaneous income 47,684 115,967 ---------------- --------------- Earnings from operations before provision for income taxes 2,924 92,924 Provision for income taxes 8,000 33,000 ---------------- --------------- Net earnings (loss) $ (5,076) 59,924 ================ =============== Net earnings (loss) per share - basic $ 0.00 0.01 ================ =============== Net earnings (loss) per share - diluted $ 0.00 0.01 ================ =============== Weighted average shares - basic 4,273,500 4,273,500 Potential dilutive shares - 111,377 ---------------- --------------- Weighted average shares - diluted 4,273,500 4,384,877 ================ ===============
See accompanying notes to consolidated financial statements. F-3 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Stockholders' Equity Years ended March 31, 2000 and 1999
Accum- ulated other Common stock Additional compre- ------------ paid-in hensive Retained Shares Par value capital loss earnings ---------- ---------- ---------- --------- ---------- Balance at March 31, 1998 4,450,000 44,500 $3,515,699 -- 5,322,282 Net earnings -- -- -- -- 59,924 ---------- ---------- ---------- --------- ---------- Balance at March 31, 1999 4,450,000 44,500 3,515,699 -- 5,382,206 Comprehensive loss: Net loss -- -- -- -- (5,076) Unrealized loss on available-for- sale marketable securities, net of tax benefit of $12,150 -- -- -- (68,600) -- Total comprehensive loss Balance at March 31, 2000 4,450,000 44,500 $3,515,699 (68,600) 5,377,130 ========== ========== ========== ========== ========= Total Treasury stock stock- -------------- holders' Shares Amount equity ------- --------- ---------- Balance at March 31, 1998 176,500 (298,217) 8,584,264 Net earnings -- -- 59,924 ---------- ---------- ---------- Balance at March 31, 1999 176,500 (298,217) 8,644,188 Comprehensive loss: Net loss -- -- (5,076) Unrealized loss on available-for sale marketable securities, ne of tax benefit of $12,150 -- -- (68,600) ---------- Total comprehensive loss (73,676) ---------- Balance at March 31, 2000 176,500 (298,217) 8,570,512 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-4 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows Years ended March 31, 2000 and 1999
2000 1999 ---------- ---------- Cash flows from operating activities: Net earnings (loss) from continuing operations $ (5,076) 59,924 ---------- ----------- Adjustments to reconcile net earnings (loss) to net cash provided by (used in) continuing operations: Depreciation and amortization 53,559 74,339 Gain on sale of marketable securities (550) - Deferred income taxes (2,000) (4,000) Changes in assets and liabilities: Accounts receivable 562 1,487 Prepaid expenses (2,506) 8,368 Accounts payable (31,619) 7,347 Accrued expenses (19,110) (3,231) Income taxes payable (19,389) 48,045 ---------- ----------- (21,053) 132,355 ---------- ----------- Net cash provided by (used in) operating activities of continuing operations (26,129) 192,279 ---------- ----------- Net cash flows used in discontinued operations - (86,204) ---------- ----------- Cash flows from investing activities: Purchases of marketable securities (728,790) - Proceeds from sales of marketable securities 4,350 - Capital expenditures, net (6,457) (2,614) ---------- ----------- Net cash used in investing activities (730,897) (2,614) ---------- ----------- Net increase (decrease) in cash and cash equivalents (757,026) 103,461 Cash and cash equivalents - beginning of year 8,209,421 8,105,960 ---------- ----------- Cash and cash equivalents - end of year $7,452,395 8,209,421 ========== =========== Supplemental disclosure of cash flow information: Cash paid during the year for: Income taxes $ 30,084 10,511 =========== ============
See accompanying notes to consolidated financial statements. F-5 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) NATURE OF BUSINESS American Claims Evaluation, Inc. (the Company) operates in a single segment that provides a full range of vocational rehabilitation and disability management services through its wholly-owned subsidiary, RPM Rehabilitation & Associates, Inc. (b) PRINCIPLES OF CONSOLIDATION The Company's financial statements are prepared on a consolidated basis and include the Company and its wholly-owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation. (c) REVENUE RECOGNITION Revenue for vocational rehabilitation services are recognized when the related services are provided. (d) CASH AND CASH EQUIVALENTS All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents. Cash equivalents are comprised of short-term commercial paper of $6,983,206 and $7,954,166 as of March 31, 2000 and 1999, respectively. (e) MARKETABLE SECURITIES The Company classifies its investments in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. These marketable securities have been classified as available-for-sale securities and as a result are recorded at fair value. Fair value is determined based on quoted market prices. Unrealized losses, net of taxes, are reported as accumulated other comprehensive loss as a separate component of stockholders' equity. For purposes of determining realized gains and losses, the cost of marketable securities sold is based upon the first-in, first-out method. (f) PROPERTY AND EQUIPMENT Property and equipment is stated at cost, less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. (g) GOODWILL The excess of cost over fair value of net assets acquired (goodwill) is being amortized on a straight-line basis over a period of twenty years. Amortization expense amounted to $32,425 for F-6 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 each of the years ended March 31, 2000 and 1999 and is included in selling, general and administrative expenses in the consolidated statements of operations. The Company assesses the recoverability of this intangible asset by determining whether the amortization of the goodwill balance over its remaining life can be recovered through undiscounted future operating cash flows of the acquired operation. The amount of goodwill impairment, if any, is measured based on projected discounted future operating cash flows using a discount rate reflecting the Company's average cost of funds. The assessment of the recoverability of goodwill will be impacted if estimated future operating cash flows are not achieved. (h) INCOME TAXES The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on the temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted tax rates expected to be in effect when such amounts are realized and settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (i) EARNINGS PER SHARE Basic earnings per share are computed on the weighted average common shares outstanding. Diluted earnings per share reflects the maximum dilution from potential common shares issuable pursuant to the exercise of stock options, if dilutive, outstanding during each period. Employee stock options totaling 595,500 and 206,500 for the years ended March 31, 2000 and 1999, respectively, were not included in the net earnings (loss) per share calculations because their effect would have been anti-dilutive. (j) FAIR VALUE OF FINANCIAL INSTRUMENTS The book values of the Company's monetary assets and liabilities approximate fair value as a result of the short term nature of such assets and liabilities. (k) USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. F-7 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 (l) COMPREHENSIVE LOSS SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and presentation of comprehensive income and its components. SFAS No. 130 requires unrealized losses on the Company's available-for-sale marketable securities to be included in other comprehensive loss which is presented in the consolidated statements of stockholders' equity. The Statement requires only additional disclosures in the consolidated financial statements; it does not affect the Company's financial position, results of operations or cash flows. (2) MARKETABLE SECURITIES At March 31, 2000, marketable securities were classified as available-for-sale. A summary of marketable securities information related to cost, fair value and unrealized holding losses at March 31, 2000 is as follows: UNREALIZED HOLDING FAIR COST LOSSES VALUE ----------- ---------- ---------- Equity securities $ 724,990 (80,750) 644,240 =========== ========== ========== (3) PROPERTY AND EQUIPMENT Property and equipment at March 31, 2000 and 1999 consist of the following:
ESTIMATED 2000 1999 USEFUL LIFE ---------- ---------- ------------- Equipment $ 296,671 290,214 5 years Furniture and fixtures 72,366 72,366 5 to 10 years ----------- ---------- 369,037 362,580 Less accumulated depreciation 328,958 307,824 ----------- ---------- $ 40,079 54,756 =========== ==========
Depreciation expense for the years ended March 31, 2000 and 1999 amounted to $21,134 and $41,914, respectively. F-8 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 (4) INCOME TAXES Income tax expense (benefit) for the years ended March 31, 2000 and 1999 is comprised of the following: YEAR ENDED MARCH 31, ------------------------ 2000 1999 ----------- ---------- Current: Federal $ 8,000 36,000 State 2,000 1,000 ----------- ---------- 10,000 37,000 Deferred: Federal (2,000) (4,000) ----------- ---------- $ 8,000 33,000 =========== ========== The actual provision for income taxes differed from that which would have resulted when applying the statutory Federal income tax rate as a result of the following items:
YEAR ENDED MARCH 31, ------------------------------------ 2000 1999 ---------------- ---------------- Expected income tax provision at the statutory Federal tax rate $ 1,000 34% $ 32,000 34% State taxes, net of Federal tax benefit 1,000 34 - - Amortization of goodwill 11,000 376 11,000 12 Benefit of graduated rates (5,000) (170) (11,000) (11) Other, net - - 1,000 1 -------- ---- ---------- ---- Actual income tax provision $ 8,000 274% $ 33,000 36% ======== ==== ========== ====
The tax effects of temporary differences that give rise to the deferred tax assets at March 31, 2000 and 1999 are as follows: 2000 1999 --------- ------- Deferred tax assets: Depreciation $ 3,527 1,527 Unrealized loss on marketable securities 12,150 - --------- ------- $ 15,677 1,527 ========= ======= F-9 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 (5) MAJOR CUSTOMER The Company has one customer who accounted for 66% and 69% of revenues for the years ended March 31, 2000 and 1999, respectively. Services are performed by the Company for this customer under two separate contracts which expire on January 1, 2001. The renewal of these contracts can not be assured and the loss of these contracts would have a material effect on the consolidated financial statements. The Company also has a customer who accounted for 13% and 11% of revenues for the years ended March 31, 2000 and 1999, respectively. (6) STOCK OPTIONS The Company has three stock option plans, the 1985 Stock Option Plan (1985 Plan), the 1991 Stock Option Plan (1991 Plan) and the 1997 Incentive Stock Option Plan (1997 Plan). The 1985 Plan, which provided for the granting of 400,000 stock options of the Company's common stock, expired except as to options outstanding. The 1991 Plan provides for the granting of 400,000 stock options, which may be incentive or non-qualified stock options, to directors and employees. The 1991 Plan also provides for stock appreciation rights. No such rights have been granted as of March 31, 2000. The 1997 Plan provides for incentive or non-qualified stock options to be granted to key employees, officers, directors, independent contractors and consultants of the Company, for the purchase of up to 750,000 shares. Under the Plans, options may be granted at prices not less than the fair market value on the date the option is granted. Options become exercisable as determined at the date of grant by a committee of the Board of Directors. Options expire ten years after the date of grant unless an earlier expiration date is set at the time of grant. The vesting schedules for the options are from zero to five years. Changes in the options outstanding during the years ended March 31, 2000 and 1999 are summarized in the following table: WEIGHTED NO. OF AVERAGE SHARES EXERCISE PRICE ---------- --------------- Balance - March 31, 1998 550,500 $ 1.70 Fiscal 1999: Options granted 20,000 2.25 ---------- ---- Balance - March 31, 1999 570,500 1.72 Fiscal 2000: Options granted 25,000 2.50 ---------- ----- Balance - March 31, 2000 595,500 $ 1.75 ========== ===== F-10 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 As of March 31, 2000, 6,000 and 370,000 options were available for grant under the 1991 Plan and 1997 Plan, respectively. The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options at March 31, 2000:
WEIGHTED AVERAGE EXERCISE WEIGHTED PRICE OF AVERAGE NUMBER OF OPTIONS EXERCISABLE CONTRACTUAL EXERCISE PRICE OUTSTANDING EXERCISABLE OPTIONS LIFE REMAINING -------------- ------------ ----------- ---------- -------------- $1.25 300,000 300,000 $1.25 7 years $1.82 - $2.50 295,500 246,750 $2.24 4.8 years ---------- ---------- ----- --------- 595,500 546,750 $1.70 5.5 years ========== ========== ===== =========
The Company has adopted the "disclosure only" provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and will continue to use the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been recognized for the Company's stock option plans. Had compensation expense for the Company's stock option plans been determined based on the fair value at the grant date for awards during the years ended March 31, 2000 and 1999 consistent with the provisions of SFAS No. 123, the Company's net earnings (loss) and earnings (loss) per share would have been reduced to the pro forma amounts indicated below: 2000 1999 ---------- ---------- Net earnings (loss): As reported $ (5,076) 59,924 Pro forma (30,589) 42,339 Basic net earnings (loss) per share: As reported .00 .01 Pro forma (.01) .01 Diluted net earnings (loss) per share: As reported .00 .01 Pro forma (.01) .01 F-11 (Continued) AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements March 31, 2000 and 1999 The weighted average fair value per stock option granted was $1.45 and $1.03 for those options granted in the years ended March 31, 2000 and 1999, respectively. The Company estimated the fair values using the Black-Scholes option pricing model, using the following assumptions: 2000 1999 ---------- ----------- Expected dividend yield - - Risk-free interest rate 6.00% 6.00% Expected stock price volatility 59.00% 55.00% Expected option lives (years) 7.5 7.5 The pro forma effects on net earnings (loss) and net earnings (loss) per share for the years ended March 31, 2000 and 1999 may not be representative of the pro forma effects in future years since compensation cost is allocated on a straight-line basis over the vesting periods of the grants, which extend beyond the reported years. (7) RETIREMENT PLAN The Company sponsors a retirement plan pursuant to section 401(k) of the Internal Revenue Code (the "Code") for all employees meeting certain service requirements. Participants may contribute a percentage of compensation not to exceed the maximum allowed under the Code. The plan provides for a matching contribution by the Company which amounted to $8,597 and $2,917 for the years ended March 31, 2000 and 1999, respectively. (8) COMMITMENTS Rental expense under non-cancelable operating leases for office space amounted to $131,966 and $132,990 for the years ended March 31, 2000 and 1999, respectively. Minimum lease payments under non-cancelable operating leases, exclusive of future escalation charges, as of March 31, 2000 are as follows: 2001 $ 118,000 2002 116,000 2003 118,000 2004 97,000 2005 53,000 2006 and thereafter 13,000 ----------- Total minimum lease payments $ 515,000 =========== F-12 EX-10.1 2 0002.txt LEASE RENEWAL AGREEMENT EXHIBIT 10.1 LEASE RENEWAL AGREEMENT THIS AGREEMENT made this 16th day of May, 2000 between Gateway Associates, a Washington General Partnership, as Owner, and RPM Rehabilitation & Associates, Incorporated, as Tenant. WITNESSETH: WHEREAS, by that certain lease dated the 10TH day of March, 1995, hereinafter referred to as the said Lease, Gateway Associates, a Washington General Partnership, as Owner, leased RPM Rehabilitation & Associates, Incorporated, Tenant, for a term of FIVE (5) years commencing April 1, 1995 and expiring June 30, 2000, the following described premises situated in the City and County of Spokane, Washington, to-wit: 901 E. 2nd Avenue - Suite 210, Spokane, Washington, 99202 NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties do hereby covenant and agree as follows: FIRST: That except as herein modified, all terms and conditions of said Lease dated March 10, 1995, shall be the same and remain in full force and effect. SECOND: Paragraph 1. PREMISES shall be amended to decrease the square footage by 614 square feet to a new square footage of 3,274 square feet. THIRD: Paragraph 2. TERM shall be amended to extend the term from July 1, 2000 and end June 30, 2005. FOURTH: The rent as described in Paragraph 3 RENT shall be as follows: July 1, 2000 - June 30, 2001 - $3,956.08 per month July 1, 2001 - June 30, 2002 - $4,074.77 per month July 1, 2002 - June 30, 2003 - $4,197.01 per month July 1, 2003 - June 30, 2004 - $4,322.92 per month July 1, 2004 - June 30, 2005 - $4,452.61 per month FIFTH: OPTION TO CANCEL. Tenant shall have the option to cancel this lease on June 30, 2001, and again on June 30, 2003, and again on June 30, 2004, only under the condition that their contract with Washington State Department of Labor and Industries is not renewed; provided, however, that Tenant give to Owner or Owner's Agent written notice to cancel this Lease at least three (3) months prior to the effective date of cancellation. If Tenant elects to cancel this Lease, then Tenant shall pay to Owner the sum of $12,000.00 for the first two options and $6,000.00 for the third and final option thirty (30) days prior to vacating the premises as a condition of this right to cancel. SIXTH: Owner shall provide the improvements as shown in Exhibit "A", attached hereto and made a part hereof. SEVENTH: Each and all of the covenants, terms, and agreement, and obligations of this Lease Addendum Agreement shall extend to and bind and inure to the benefit of the heirs, personal representatives, and successors and/or assigns of Owner and to the successors and/or assigns of the Owner. IN WITNESS WHEREOF, the parties hereto have executed this agreement the day and year first above written. TENANT: /s/ James N. Hedley RPM Rehabilitation & Associates, Inc. - ------------------------------------- ------------------------------------- /s/ Christopher R. Ashenbrener BY: /s/ Gary J. Knauer, CFO - ------------------------------ --------------------------------------- EX-23 3 0003.txt CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS The Board of Directors American Claims Evaluation, Inc.: We consent to incorporation by reference in the registration statement (No. 333-39071) on Form S-8 of American Claims Evaluation, Inc. of our report dated May 22, 2000, relating to the consolidated balance sheets of American Claims Evaluation, Inc. and subsidiary as of March 31, 2000 and 1999, the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the two-year period ended March 31, 2000 which report appears in the March 31, 2000 annual report on Form 10-KSB of American Claims Evaluation, Inc. KPMG LLP Melville, New York June 26, 2000 EX-27 4 0004.txt FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. YEAR MAR-31-2000 MAR-31-2000 7,452,395 644,240 89,429 1,000 0 8,222,627 369,037 328,958 8,699,092 128,580 0 0 0 44,500 3,515,699 8,699,092 1,109,286 1,109,286 510,706 510,706 1,105,147 0 0 2,924 8,000 (5,076) 0 0 0 (5,076) 0.00 0.00
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